Trade war likely to impact global growth by 100 bps, says S&P

The International Monetary Fund (IMF) has projected global growth at 3.9 per cent for 2018 and next year, against 3.8 per cent in 2017.

With US President Donald Trump threatening a hike in import tariff and America's trading partners warning for a tit-for-tat action, it seems the world is on the verge of a trade war. If it happens, global growth will slow down by one percentage point, S&P Global’s chief economist Paul Gruenwald cautioned on Monday.
 
The International Monetary Fund (IMF) has projected global growth at 3.9 per cent for 2018 and next year, against 3.8 per cent in 2017. 
 
As per the Organisation for Economic Cooperation and Development (OECD), global GDP growth could inch up a tad in 2018 to 3.8 per cent, compared with 3.7 per cent in 2017.
 
Talking to CNBC, he said while it may not be a global recession but “one could imagine a scenario where rather than global growth in the threes we have global growth in the twos, where you get the US and Europe and China all pulling back at the same time”.
 
India, which recorded a seven-quarter high of 7.7 per cent in Q4FY18, will also be affected by the trade war, say experts.
 
US President Donald Trump, last week, said he likes free trade but it should be a fair trade. He warned other countries of reciprocal tariff if they keep on imposing high tariffs to US products. 
 
“You know, all of these countries, including the European Union, they charge five times the tariff. They charge five times what we charge for tariffs. I believe in the word ‘reciprocal’. You’re going to charge five times? We’re going to charge five times. That hasn’t been done. No other president ever brought it up. And it’s going to be done now,” Trump told reporters at the White House. 
 
“We lose over USD 100 billion a year with Mexico. We lose many, many, many billions of dollars with Canada. They are (Canada) very restrictive as to taking our agricultural product and other things,” Trump said.
 
The European Union and Canada have threatened retaliatory measures if the US government does not roll back tariff hike on new steel and aluminium.
 
China has said it wouldn’t increase the purchases of American products if President Donald Trump goes ahead with his threat to impose tariffs on Chinese imports.
 
Source: Financial Express, Media reports

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